Risk Management

For British Land, effective risk management is a cornerstone of delivering our strategy and integral to the achievement of our objective of delivering sustainable long term value. We maintain a comprehensive risk management process which serves to identify, assess and respond to the principal risks facing our business, including those risks that could threaten the Group’s solvency and liquidity, as well as identifying emerging risks. Our approach is not intended to eliminate risk entirely, but instead to manage our risk exposures across the business, whilst at the same time making the most of our opportunities.

Our Risk Management Framework

Our integrated approach combines a top down strategic view with a complementary bottom up operational process outlined in the diagram below.

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The Board is responsible for the overall approach to risk management with a particular focus on determining the nature and extent of exposure to principal risks it is willing to take in achieving its strategic objectives. This is assessed in the context of the core strengths of our business and the external environment in which we operate – this is our risk appetite.

The Audit Committee takes responsibility for overseeing the effectiveness of risk management and internal control systems on behalf of the Board, and also advises the Board on the principal risks facing the Group including those that would threaten its solvency or liquidity.

The Executive Directors are responsible for delivering the Company’s strategy and managing risk. Our risk management framework categorises our risks into external, strategic and operational risks and the Risk Committee (comprising the Executive Directors and chaired by the Chief Financial Officer) is responsible for managing the principal risks in each category in order to achieve the Group’s performance goals.

Whilst responsibility for oversight of risk management rests with the Board, the effective day-to-day management of risk is embedded within our operational business units and forms an integral part of how we work. This bottom up approach ensures potential risks are identified at an early stage and escalated as appropriate with mitigations put in place to manage such risks. Each business unit maintains a comprehensive risk register which is reviewed quarterly by the Risk Committee, with significant and emerging risks escalated to the Audit Committee.

Our changing risks and focus

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The Board has undertaken a robust assessment of the principal risks and uncertainties that the Group is exposed to in light of the long term trends we are facing and in light of the EU referendum result. Several of our principal risks are elevated as a result of the increased political and economic uncertainty (as shown by the risk heat map above).

Looking forward, risks that also could be impacted while the terms and timing of exit are negotiated, and potentially beyond are: investor and occupier demand, availability of finance, execution of investment strategy and income sustainability. We remain mindful of potential headwinds going forward and our risk appetite and tactical decisions will reflect the evolving environment to ensure the business remains both resilient and well positioned to capture upside in the future.

Also, several of our principal risks have evolved in nature; the regulatory environment is now recognised within a broader ‘Political and Regulatory Outlook’ risk; and the ‘Development Strategy’ risk has been expanded to include development cost inflation.

Other areas of focus for the Risk Committee during the year included:

  • Culture
  • Cyber security
  • Asset level crisis plan
  • Fraud and whistleblowing
  • Effectiveness review of our risk process

During the year, we have undertaken an effectiveness review of our risk management process, as well as an internal audit. Our risk management process appropriately Supports the effective management of risks, whilst maintaining a practical approach and meeting the requirements of the UK Corporate Governance Code.

We have built on our existing process by embedding risk management discussions in the relevant business unit management committees and provided training for our risk specialists across the business.

This year we hosted a major civil contingencies exercise simulating a large scale critical incident at one of our multi-let retail assets. This was undertaken with support from several police forces, fire and ambulance and other national agencies and enabled us to test our capabilities and preparedness in the event of a significant emergency.

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